Supply Chain Impact on Shareholder Value

Is it possible to quantify the cost of supply chain disruptions to shareholder value? Accenture thinks so.Based on research shared in the World Economic Forum Report, on average “supply chain disruptions can reduce shareholder value by 7%, with disruptions affecting stock prices even before formal announcements or coverage of impacts.”

Moreover, stock prices do not recover “for months after the announcement” or specific news coverage. And “the longer it takes to resolve the disruption, the more negative is its impact” on shareholder value. These findings were based on an analysis of 62 supply chain disruptions between 2005-2011, using various sources including media publications and company websites.

Procurement and supply chain organizations should build cost models to justify the investment in supply chain risk mitigation strategies based on a range of financial outputs linked to the top line, bottom line and direct shareholder measurements (e.g., stock price)

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